Your 401K Retirement Money Is Not Yours!

Looking to pay the bills? Looking to go in the extra vacation? Maybe buy a new car? Or just have a little bit of fun? I understand. We all want that. We also all want to have little bit of thrill and excitement in our life. But we know better than to make decisions that are probably a little hasty.

For instance, if we are going skydiving, we’ll probably going to bring a parachute and qualified, trained people and maybe even go tandem first. Something similar comes up when it’s retirement money and funds come into play. Before you get into a 401K, hopefully you read at least read some of the paperwork and understood what you were getting into.

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You were locking up your money for a significantly long portion of time so that you can achieve good rates of return and not have to pay taxes on it.

Ok, so think about that for a little bit. Not having to pay taxes, getting greater returns, and having to wait a really long time. What were the consequences? Well, paying taxes and gigantic fees. Basically, you take whatever money you see in your 401K…I’m not a financial advisor, I can’t give you advice…blaba, blaba, whatever…speak to the professionals that have licenses and stuff so they can give you better information.

But, look at whatever money you have in your 401K right now, divide it in half, take another 10 percent off of that as a rough estimate, and not 50 percent, do the math. That’s a rough estimate of what you can expect to have, cash in hand, after several weeks and certainly not immediate.

Now, take on the other hand the money that’s already in there that you already gotten used to not having yet. Ok? So, it’s not money you consider a possibility of spending. Take that hundred thousand dollars, put that, or ten thousand dollars, whatever, put the magic of compounding interest and time on top of it, and what you think you’re gaining now by pulling out the five thousand or the fifty thousand dollars, and flip it up to see what it’ really worth.

The opportunity costs that you’re paying, besides the astronomically silly fees you’re getting charged. That’s ten or that hundred K would easily be two million if you’re invested in moderately conservative allocations. So, what you’re getting in fifty thousand dollars now is really costing you one million nine hundred fifty thousand dollars in thirty years.

Are you OK with that? Are you really OK with that and you won’t be upset about it later? I don’t know. The short answer is do not touch your 401K. Once you donated to that fund, it’s gone. It’s just like when you give money to people. You can’t tell them what to do with it afterwards.

You put you money into your 401K, some smart people take care of it for you, and you’re done. You cash in later. That’s it. End of the story. Nothing else to it. Keep your retirement and your security net later on alone, and find other ways to make more money or scrounge where you can. I know it’s a tough answer, but it’s the right one. Good luck. Peace out.